NAA Sues PRC Over Valassis Deal

The Newspaper Association of America is showing its legal teeth with a lawsuit filed against the Postal Regulatory Commission on behalf of its members, disputing the legality of a deal struck
between the U.S. Postal Service and Valassis Direct Mail.

The lawsuit, filed in the U.S. Court of Appeals for the District of Columbia Circuit, contends that the PRC erred in concluding that
the USPS deal did not constitute an “unreasonable harm to the marketplace.”

The NAA claims that the negotiated service agreement between USPS and Valassis, which charges
Valassis a lower “special contract rate” for direct mailings, gives the latter an unfair advantage over competitors, including newspaper publishers, in fields like retail advertising.

Specifically, the NAA believes it creates a price inventive for advertising clients to stop paying for advertising inserts in newspapers and deliver them via direct mail instead.

The PRC agreed to review the terms of the NSA after earlier protests by the NAA and others. However, the NAA contends that the definition of “unreasonable harm to the marketplace” used
by PRC in its review was too narrow, since it was taken to mean only that “the Postal Service is not pricing its products below cost.” Instead, NAA asserts that the Postal Accountability
and Enhancement Act requires the PRC to take a broader view, including assessing potential harm to competitors of the Postal Service’s NSA partner.

The NAA also noted that the
PRC didn’t require the Postal Service to identify any markets where the NSA will be implemented, making it impossible to conduct an analysis of potential limpacts.

Previously,
in August 2012, the NAA blasted the USPS-Valassis NSA as a “sweetheart deal.” At the time, NAA president and CEO Caroline H. Little noted that “the Public Representative appointed by
the Commission itself to represent the views of the general public” judged the deal to be “a lose-lose proposition for both the newspaper industry and the Postal Service.”